China-based e-commerce company Alibaba Group and private equity firm Yunfeng Capital have together invested $1.22bn in internet video company Youku Tudou.
Alibaba will take a 16.5% stake in the company, with Yunfeng acquiring a 2% share, and Alibaba CEO Jonathan Lu will join Youku Tudou’s board of directors in conjunction with the funding.
“We are very pleased to have Alibaba as our strategic investor,” said Victor Koo, Chairman and CEO of Youku Tudou. “Alibaba’s investment will strengthen Youku Tudou as China’s largest online video platform and further differentiate our services and user experience. It will help us continue to build an immersive cultural entertainment platform that integrates online and offline entertainment.”
Youku floated on the New York Stock Exchange in 2010 through a $202.9m initial public offering, and acquired rival Tudou in 2012 in an all-share transaction. Following the IPO, venture capital firm Chengwei Capital held a 59.3% stake in Youku, but this had been diluted to 20.7% in the joint company prior to Alibaba’s investment, while T. Rowe Price held a 6.1% share.
The deal marks Alibaba’s latest major investment in 2014, after paying $1.5bn for auto navigation company AutoNavi and investing a total of more than $1.1bn in Lyft, InTime and Tango.